Biotech company Illumina Inc. (ILMN) agreed to buy healthcare company GRAIL, Inc. in a cash and stock deal valued at $8 billion. This includes $3.5 billion in cash and $4.5 billion in shares of Illumina common stock.
GRAIL focuses on multi-cancer early detection from blood. It is in the process of developing the technology and providing clinical data required to launch the Galleri multi-cancer screening test, which is seen as the most promising new tools in the fight against cancer.
The Galleri multi-cancer screening test is expected to launch commercially in 2021. An earlier version of Galleri was able to detect more than 50 cancer types, over 45 of which have no recommended screenings in the U.S.
Cancer is one of society’s most significant challenges, with most cancer being detected too late. The multi-cancer early detection technology could address the unmet need and reduce the cancer burden.
The deal is expected to help Illumina accelerate commercialization and adoption of GRAIL’s multi-cancer early detection blood test as well as enhance GRAIL’s patient access and expand its global reach. It will also help transform cancer care using genomics and Illumina’s Next-Generation Sequencing (NGS) platform.
GRAIL comes back into the Illumina fold after it was spun out as a standalone company in January 2017. GRAIL was founded by Illumina in 2016 and is now backed by Amazon founder Jeff Bezos and billionaire Bill Gates. Illumina currently holds 14.5 percent of GRAIL’s shares outstanding and about 12 percent on a fully diluted basis.
The total NGS oncology testing addressable market is expected to grow at a CAGR of 27% to $75 billion in 2035.
GRAIL stockholders will also receive future payments representing a tiered single digit percentage of certain GRAIL-related revenues. The agreement has been approved by the Boards of Directors of Illumina and GRAIL.
Upon closing of the transaction, GRAIL stockholders excluding Illumina will receive between approximately 9.9 million and approximately 13.4 million Illumina shares. Illumina stockholders are expected to own approximately 93 percent of the combined company, while GRAIL stockholders will own approximately 7 percent.
The transaction is expected to add to to Illumina revenue starting in 2021.
After concluding the transaction, expected in the second half of 2021, GRAIL will operate as a standalone division within Illumina.
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